South Africa QROPS v SIPP FAQ

Here are a few of the most common questions, specific to those resident in the South Africa, that arise from those with UK pensions that are now living in South Africa. This page answers South Africa QROPS v SIPP FAQ (Frequently Asked Questions).

South Africa QROPS v SIPP FAQ No1 – South Africa has QROPS listed on the HMRC list but there are restriction on currency and lump sum benefits. Take specialist advice and look at all the alternatives before moving to a South Africa QROPS.

It depends on whether it is offshore, onshore and whether it has been actioned prior to the 9 March 2017; post 9 March 2017 where UK pensions are sent to a QROPS in a different country from the recipient it is likely to result in the pension transfer to be taxed 25% on the full transfer.

So for an offshore QROPS it is a non-starter for most people.

For an onshore QROPS it is highly unlikely, because of the DTT and special provisions between the UK and South Africa. These pension provisions mean there is no tax due in the UK on British pensions if you remain resident in South Africa. Most QROPS actually increase the taxation due although clients are often not told about the UK special provisions, and are encouraged to transfer needlessly. However, some South African residents with existing funds have considered a QROPS and may need a review. To answer this requires specialist advice before a recommendation can be made.

The Double Taxation Agreement or Double Tax Treaty (DTT) between the UK and South Africa is long established and the way a SIPP and other UK pensions are treated for tax by a resident in South Africa is also clear. Therefore, a UK pension transfer is allowable and no tax should be payable on transfer to a SIPP, and no UK tax will be due on accessing the SIPP if the correct special provision form has been completed.

NOTE Budget 2017 – Any UK pension transfer post 9 March 2017 sent to a QROPS in a different country from the recipient outside the EEA is likely to result in the pension transfer to be taxed 25% on the full transfer – End of NOTE

South Africa QROPS v SIPP FAQ No2 – Gibraltar has no Double Tax Treaties and withholds 2.5% tax on income that cannot be reclaimed. Gibraltar offers little or no protection on funds or advice. For most people, especially those with funds of less than £250,000, then a UK pension is a better option that a Gibraltar QROPS.

Probably in most cases but not all. Are you planning on remaining a South African resident, otherwise you should be aware that any UK pension transfer post 9 March 2017 sent to a QROPS in a different country from the recipient outside the EEA is likely to result in the pension transfer to be taxed 25% on the full transfer.

A SIPP is certainly as tax efficient if not more so, and is protected under the strict UK regulatory regime. However, very large UK pension funds (approaching £1 million) have to consider the Lifetime Allowance, that has additional tax considerations. Additionally, there will always be client specific circumstances that need to be considered . There is no “one size fits all”.

This question comes up as a result of expat advisers in South Africa, or product salesmen outside both Britain and South Africa, marketing UK pension transfers to QROPS usually in Gibraltar or Malta. In fact it is the third most South Africa QROPS v SIPP FAQ!

Beware of hidden commissions that are not declared to you, the client. Our view is that only an Advisor, regulated in both the UK and registered with the FSB , can advise on all the options in tandem with a South Africa tax adviser. Further, only a UK regulated adviser will have access to the full pension market to get the best deal for the client.

Most expat advisers are product salesmen looking to sell a QROPS as against give advice about the best options for a UK pension, and most of them have no UK qualifications and pretend to have access to a UK specialist firm producing a document which is worthless in terms of protection. Therefore, the answer to this question is a resounding “no”!

NOTE Budget 2017 – Any UK pension transfer post 9 March 2017 sent to a QROPS in a different country from the recipient outside the EEA is likely to result in the pension transfer to be taxed 25% on the full transfer – End of NOTE

This South Africa QROPS v SIPP FAQ is linked to advice to transfer each and every UK pension to Gibraltar trustees with Royal London 360 investment bonds, also known as RL360, or STM Portfolio Bond or Investors Trust. We would strongly recommend you have this advice reviewed. In two cases we have come across we have had to reverse the pension transfer previously recommended and there were potentially large surrender penalties applied due to hidden commissions that were not declared to the client. We would like to highlight that this is no reflection on Gibraltar trustees or indeed on Royal London 360 ( RL360 )who had done nothing wrong. The fault was entirely at the door of the expat salesman who claimed they were registered in South Africa, but in fact were declaring that UK pension transfers did not come under the FSB registration and so in fact the business was being processed overseas outside of any UK or South Africa regulation.

Disclaimer

Aisa International is not licensed to give tax advice on pension transfer matters – nothing on this page or website should be construed as personal tax advice in South Africa but only as guidance on the questions you should be seeking answers to.

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Consideration Options & Results

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Years to Retirement

Outline consideration with respect to time left

With less than 5 years to go it is all about planning. Too many people set a date and then hope that by chance their investment fund will be highest at that point. What you should be doing is planning a requirement and whenever you hit that target lock your fund in.

Outline consideration with respect to time left

We call this the emergency last chance saloon period. This is often the time when people actually start thinking about how they are going to maximise their investment and any shortfall they may have. You still have time to take sensible planned investment risk.

Outline consideration with respect to time left

This period often coincides with other family events like children leaving home. This probably means maximum earning potential, investing and saving and potentially maximum risk taking. You need to take advantage of this period and grow your pension.

Outline consideration with respect to time left

This is the calm before the storm period. When every aspect of life is in between commencement and completion. For your pension savings this is exactly the same and this is when you really need to take a moment, reflect on what you are trying to achieve.

Outline consideration with respect to time left

People often have other priorities with this length of time remaining to retirement. They are home building, looking to expand their mini empires with property and children. However, every dollar saved now means you can save two dollars less in the future.

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Consideration Options & Results

Complete the fields below, then click next to find your target fund value.

Current age

Retirement age

Income planned (annual)

Click next to find your target fund value.

Outline Target Fund Required

£ 0

The projected figure is a guideline target result based on the income figure you have input. It does not take into account inflation. Contact us for an inflation allowed figure by providing your details.

£

Years to Retirement

With less than 5 years to go it is all about planning. Too many people set a date and then hope that by chance their investment fund will be highest at that point. What you should be doing is planning a requirement and whenever you hit that target lock your fund in.

We call this the emergency last chance saloon period. This is often the time when people actually start thinking about how they are going to maximise their investment and any shortfall they may have. You still have time to take sensible planned investment risk.

This period often coincides with other family events like children leaving home. This probably means maximum earning potential, investing and saving and potentially maximum risk taking. You need to take advantage of this period and grow your pension.

This is the calm before the storm period. When every aspect of life is in between commencement and completion. For your pension savings this is exactly the same and this is when you really need to take a moment, reflect on what you are trying to achieve.

People often have other priorities with this length of time remaining to retirement. They are home building, looking to expand their mini empires with property and children. However, every dollar saved now means you can save two dollars less in the future.

For personal advice, please tell us about yourself. Click next.

For personal advice, please tell us about yourself.

We have a strict confidentiality policy but the truth is if you don’t contact us we can’t help you. And we can’t think of alternative method of disclosure.

Name

Country of residence

Telephone

Email

All fields required

Aisa International (Pty) Ltd is regulated by the Financial Services Board | License Number: 47638 | Aisa International (Pty) Ltd, 3rd Floor Heritage House, 20 Dreyer Street, Claremont, Western Cape 7708, Tel +27 (0) 21 823 9729, Mobile: +27 (0) 84 729 2210. | Aisa International (Pty) Ltd is known as Aisa International. Aisa Group also has a U.K. limited corporation called Aisa Direct, which is authorised and regulated by the FCA - Reg.189652, and is also a U.S registered advisor with the Securities & Exchange Commission (SEC) - CRD# 172777 | The guidance contained within this website is targeted at those people who are connected with South Africa. | Aisa International is not licensed to give tax advice on pension transfer matters – nothing on this page or website should be construed as tax advice in South Africa.